The notional open interest of Bitcoin futures contracts has climbed to a 26-month high of $21 billion, fueling optimism about the leading cryptocurrency’s recent price rally. However, experts urge caution, highlighting potential risks associated with this leveraged trading surge.
Data from CoinGlass reveals the growing interest in Bitcoin futures, reflecting an influx of bullish bets alongside the recent 28% price increase. This coincides with the launch of spot Bitcoin ETFs in the US, which saw significant inflows over the past three weeks.
Leverage, while amplifying potential profits, also magnifies losses. A significant rise in open interest can indicate impending price volatility. However, current data suggests moderate leverage levels, reducing the immediate risk of mass liquidations triggering a potential crash.
Bitcoin’s estimated leverage ratio is currently at 0.20, still far below the August 2022 peak, according to CryptoQuant. Additionally, open interest in terms of actual Bitcoin (430,500) remains below the October 2022 high of 660,000.